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What’s Next for the EU and the Markets

May 21, 2012 – 5:00 pm

This morning the news has shifted from when will Greece leave the EU to what plans and ideas the EU has to spur growth. Greece is still likely to be booted out or leave on their own but the rest of the EU is trying to move past whatever happens in Greece. In fact they need to set up a mechanism for any country to leave the EU in an orderly fashion. More countries, someday, will exit the Union either because they have to for their own survival or the core countries will not tolerate obscene violations of the rules. In fact why didn’t they set it up years ago in the first place? The reasons were simple: they wanted to make sure that once you were in the EU that there was no way to exit. However, they weren’t too bright were they? How could you not see that at some time in the future a country was going to violate the various rules to such an extent that you ‘want’ them out? In fact they let a number of countries join the EU that did not meet the requirements to join. And the main reason for the violations was because these countries did not meet the debt ratios the EU required. It was a flawed system and still is.

Regardless, Europe is going to be an issue that is not going away anytime soon but the stock market will begin to look beyond it. If the Europeans make a passing effort to deal with their issues our market is going to rise. Summer may be a time of uncertainty but that uncertainty is going to be a great entry point to buy good stocks at low prices. The problem with that is that professionals are already lining up to do that which may mean corrections are not going to be very deep.

On the other hand we do have a presidential election here in the U.S. in the Fall. It is a never ending struggle.

Good Trading
Steve Peasley

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